I don’t know if buying Citigroup stock is a good idea or not. But I think it’s worth mentioning that if you’d applied that logic to Lehman Brothers stock in early September, you’d have lost a bundle.
I did the same thing when a certain biotech stock dropped from a high of $80 to $20, and then down to $10. It’s now trading at $3.50 a share (edit: shit, just checked and it’s $2.20/share). Sure, Citibank is probably more stable than a biotech stock, but with the way the financial sector has been doing lately and with the high profile bankruptcies, you never know.
Here’s what you really need to know about Citigroup.
Citigroup is one of the most thoroughly corrupt corporations on the face of the planet. They have been involved up to their eyebrows in almost every major instance of corporate crime, from the accounting scandals in 2001-2 to this year’s scandals in the real estate market. It’s not just in America, but worldwide. They’ve been caught robbing from their own employees, commiting fraud, giving bribes, false advertising, predatory lending, obstruction of justice, shredding documents, and just about any other financial crime you can name.
So, given the way that they treat their employees, their customers, and everyone else, do you want to trust your money to them? Even if they somehow survive the current crisis, it’s likely that they’ll just hop on board with the next bad idea that sweeps the financial world, and get caught in the next downturn. Why take the risk?
Invest in bonds. They’re safer and steadier.
If it is okay to piggy back with a couple of my own stock questions.
I was/am going to jump into the market with $1000 myself with maybe a $100 each month after that. I keep putting off pulling the trigger though- ‘oh, I’ll wait for one more drop’, ‘I’ll wait till after the election’, ‘well, maybe after the inauguration’, etc…
Are there any signs to look for, for when the market will stabilize and turn bullish again? Maybe something like a few days of no movement, or only modest changes? Any certain types of stocks to watch as indicators?
Also, is it almost a necessity to have to buy so many shares? What I mean is, there are few stocks that I like that are in the $15-25 range that I would buy maybe 4-6 shares of, and a couple in the $50 range that I would buy 1-2 of. There are a couple of under $10 dollar stocks I might purchase 10-15 shares of as well. Is such modest diversifying a pointless endeavor? Would I be better off having more shares of fewer companies? If I do consolidate would it be better to pick a single industry(water,biodiesel,biotech, or infrastructure) and have multiple companies from that industry, or pick one company from each industry.
One last question, how difficult is it to move from one online/discount broker to another? I originally opened an account with one because they had cheaper transaction fees, but I realized after the fact that I couldn’t buy partial shares from them; after I make my initial purchases, can I move them to another company that does partial shares/dividend reinvestment?
My plan is to sort of build my own mutual fund with a buy and hold mentality.
My little voice says “burn down the neighbor’s house and have sex with their dog.”
Fortunately, I am strong.
None that are reliable, especially in this market. Some people do a “technical analysis” which is basically an attempt to draw predictive patterns from stock charts. For example, seeing a “head and shoulders” pattern to a stock price or waiting for the stock price to cross a “bollinger band”. The logic is that all the information about a particular stock can be gathered from it’s price. Truth is that these methods are unreliable and different traders will come up with very different results.
Basically it’s very difficult to time the market and you have a pretty good chance of either jumping in or getting out too early or too late.
It’s only necessary if you have to pay a commission (I get a lot of free trades with my bank, so not an issue for me). If you by one share at $5 and there’s a $10 commission, that stock needs to go up 400% just for you to earn a profit. If you but 1000 shares at $5, the commission would be negligable compared to the value of your position.
As for whether it would be “better” for you to pick one segment over another, what is your strategy? Do you think a particular market segment is going to take off? Do you plan on researching the hell out of that segment and finding which stocks are overvalued?
The problem with just picking stocks you think are good companies or in growing industries is that you have no idea how long they will stay good.
As a general rule, the more you diversify, the better, but also keep in mind the more you diversify the more you dilute potential profits.
Open up a new account with the new bank. Call customer service at the bank and ask them how to transfer from another bank. They will tell you everything you need to know.
Here’s the problem with all the Warren Buffet “buy and hold” people. You only make money when you sell the stock, not while you hold it (forgetting dividends for a second). I bought in a stock at $20, it went up to $80, missed their earnings and now they are down in the $40. Do I sell and take some profit now? Do I wait and see if it goes higher? How hi do I think this company will go? Ideally I should have sold at $80, but what if it went to $100? $120? What if it became the next Microsoft?
msmith537: Interesting informative video clip, thanks.
BTW, Citi closed today @ $3.80 ish.
I think Citi is so low because everyone is afraid of another Bear Stearns where the government comes in and forces a sell for ridiculously low prices. If Citi can survive then they might eventually regain the levels of last year. There’s to much risk of the shares becoming worthless though. At least, to much risk for me. If you have money to gamble with and you keep wanting to buy their stock then go ahead. Buy 100 shares and if they go bankrupt you’re out $380 plus commissions. No big deal. Just don’t buy to much.
Here’s a site that compares 11 different online brokerages. If you just want the cheapest commissions check out
Sogotrade $3/trade but only offers stock trading.
Firstrade $6.95/trade and offers DRIPs.
Scottrade $7/trade and probably has a office close to you. Doesn’t offer DRIPs though.
Tradeking $4.95/trade but they are mostly a options brokerage and might be to much for beginnners.
Most online brokers will charge a fee to transfer your account to another broker. This is known as a ACAT transfer and will freeze all securities for 7 - 10 days while it is being done. I’ve seen alot of online brokers offer specials where they will pay that fee for you so look for something like that. Let me guess, you have a account with Scottrade? I had a account with them too and was disappointed to find this out after opening it.
Actually that’s been me following you around & whispering in your ear.
I hate that f*ing dog.
Sharebuilder has an automatic investment plan that I have started participating in recently. I’m buying GM and Ford stock as fast as I can. I’m investing $100 every two weeks, and I’m also doing some research on penny stocks - stocks trading at less than $1 and sometimes literally pennies. I haven’t jumped on that boat yet, but I am seriously considering it.
Those people are dumb.
Anybody tries to sell you on technical analysis, run away very fast.
Dude, you need to get yourself together. Learn about money and investing. A good place to start is www.motleyfool.com.
Just the other day, Suze Orman on the Larry King Show, specifically said that a stock that has dropped to $5 is not to be bought. It will likely become a penny stock.
Why forget dividends? Also, “buy and hold” people don’t necessarily buy individual stocks either, nor flip them before a year is up. It’s about lowering taxes, and investing with low costs funds. If the whole wave goes up or down, we may lose or gain, but will always do it cheaply or cheaper than the rest.
True. You may as well have a roulette history chart above your stock picks (Gambler’s fallacy)
Sorry, this is not a good place to start for a new investor. Try bogleheads.org.
Just want to say I remember a few years back when Lucent started dropping from a high around $70. Felt like a schmuck when I sold around $14. Looked pretty good compared to folks still holding it when it dropped under $2. Never underestimate the depths to which overvalued stock in a poorly run company can sink.
Yeah, I bought and held about $2,000 worth when it was being touted as the “stock to buy”. About a week before it tanked.
I just love hearing people who don’t know their ass from a hole in the ground talking about creating their own mutual funds and buying penny stocks and essentially becoming day traders. There are people who have went to school and are smarter than all of us who can’t consistently beat a diversified buy and hold strategy, yet every plumber or doctor or engineer or mechanic thinks he can be great in the market. How about you just go to Vegas where they will at least give you free drinks and you can watch pretty women?
And now there’s a http://www.msnbc.msn.com/id/27877195/proposal to bail out Citi.
Be warned that “bailout” does not equal “safe stock bet.”